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hnn
Level 1

Multiple-member LLC to single-member LLC

Hello,

Our LLC changed from 2-member to signle-member. We filed changes with state of Calif in Dec 31, 2019 and how should we file tax now? Just for single-member LLC or how should we do? And which version of Turbo Tax to do so please?

 

Thanks,

2 Replies
MaryK1101
Expert Alumni

Multiple-member LLC to single-member LLC

If you are a Single Member LLC, you can file a Schedule C for Self-Employment which is part of your individual tax return.  You will use TurboTax Home & Business (download) or TurboTax Self-Employed (online).  You may need to obtain a new EIN because you are changing from Partnership to Single Member.  See Do You Need a New EIN?

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Carl
Level 15

Multiple-member LLC to single-member LLC

You must file a "final" 1065 return showing the sale, closure or other disposition of the multi-member LLC. All K-1's issued must also have the "final" box checked on them.

For the IRS to accept this, the partnership must show the disposition of "all" assets, inventory and vehicle use (even if that vehicle use was less than 100% business).  Most likely, all assets and inventory will be disposed of by the partnership, to the single remaining owner. This would be shown/indicated on the final K-1 received by that owner.

THen the remaining owner will open a "new" single member LLC business in whatever version of TurboTax they are using for their personal 1040 tax return.

The open/start date of the business will be *EXACTLY* *THE* *SAME* date the partnership was open for business. It flat out does not matter if it was in a prior tax year either.

The in-service date for all assets must be "exactly the same" date it was placed in service in the partnership - doesn't matter if it was a prior tax year either.

When the program asks for prior year's depreciation already taken, if it's not on the K-1 then  you can get it from the IRS Form 4562 included with the 1065 return. It's the one that prints in landscape format and is titled "Depreciation & Amortization Report". Remember you have to add together the amounts in the "prior depr" column and "current year depr" column and enter the total on your SCH C for the "total amount of prior year's depreciation already taken" on each and every individual asset.

If the partnership has unsold inventory in it's possession on the date it closed, then you show that inventory as "removed for personal use" by the one remaining owner.

Now when you enter that inventory on your personal 1040 tax return, Understand that your BOY (Beginning of Year) Inventory balance ***MUST*** be zero. There are absolutely positively no exceptions to that. If you deal with inventory and need me to explain why your BOY Inventory balance will be $0 on your SCH C, just let me know and I'll be happy to explain.

 

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